Question 1

The medical expense deduction is designed to provide relief for doctors and medical practitioners.

Accepted Answer

A) True 
 B)False

Question 2

An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit (CD) is allowed to net the penalty against the interest income from the CD.

Accepted Answer

A) True 
 B)False

Question 3

When taxpayers donate cash and capital gain property to a public charity, the AGI percentage limitation is applied in the following order:

Accepted Answer

A)  a 30 percent of AGI limitation is applied to the aggregate donation. 
B)  a 60 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation. 
C)  a 30 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation. 
D)  a 60 percent of AGI limitation is applied to the cash donation and the fair market value of the capital gain donation is subject to the lesser of a 30 percent of AGI limitation or a 50 percent of AGI limitation after subtracting the cash contributions. 
E)  donations to public charities are not subject to AGI limitations. 
A)  a 30 percent of AGI limitation is applied to the aggregate donation. 
B)  a 60 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation. 
C)  a 30 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation. 
D)  a 60 percent of AGI limitation is applied to the cash donation and the fair market value of the capital gain donation is subject to the lesser of a 30 percent of AGI limitation or a 50 percent of AGI limitation after subtracting the cash contributions. 
E)  donations to public charities are not subject to AGI limitations.

Question 4

Which of the following is a deductible miscellaneous itemized deduction?

Accepted Answer

A)  gambling losses to the extent of gambling winnings. 
B)  fees for investment advice. 
C)  employee business expenses. 
D)  tax preparation fees. 
E)  All of the choices are correct. 
A)  gambling losses to the extent of gambling winnings. 
B)  fees for investment advice. 
C)  employee business expenses. 
D)  tax preparation fees. 
E)  All of the choices are correct.

Question 5

Rental or royalty expenses are deductible "for" AGI.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a True statement?

Accepted Answer

A)  Congress allows self-employed taxpayers to deduct the employer portion of their self-employment tax. 
B)  To deduct expenses associated with any profit motivated activity, taxpayers must maintain a high level of involvement or effort in the activity throughout the year. 
C)  Business activities never require a relatively high level of involvement or effort from the taxpayer. 
D)  All business expenses are deducted for AGI. 
E)  All of the choices are correct. 
A)  Congress allows self-employed taxpayers to deduct the employer portion of their self-employment tax. 
B)  To deduct expenses associated with any profit motivated activity, taxpayers must maintain a high level of involvement or effort in the activity throughout the year. 
C)  Business activities never require a relatively high level of involvement or effort from the taxpayer. 
D)  All business expenses are deducted for AGI. 
E)  All of the choices are correct.

Question 7

Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence for acquisition debt incurred after December 15, 2017.

Accepted Answer

A) True 
 B)False

Question 8

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

Accepted Answer

A) True 
 B)False

Question 9

The profit motive distinguishes "business" activities from "personal" activities.

Accepted Answer

A) True 
 B)False

Question 10

Qualified education expenses for purposes of the deduction of interest on educational loans are expenses paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent to attend a post-secondary institution of higher education.

Accepted Answer

A) True 
 B)False

Question 11

Erika (age 62) was hospitalized with injuries from an auto accident this year. She incurred the following expenses from the accident:
   
In addition, Erika's auto was completely destroyed in the accident. She bought the car several years ago for $18,000 and it was worth $4,700 at the time of the accident. What are Erika's itemized deductions this year if she was uninsured and her AGI is $40,000?

Accepted Answer

$2,030 of medical expenses.
Th

Question 12

Generally, service businesses are considered qualified trade or businesses for purposes of the deduction for qualified business income.

Accepted Answer

A) True 
 B)False

Question 13

Bunching itemized deductions is one form of tax evasion.

Accepted Answer

A) True 
 B)False

Question 14

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship. How much of this loss is not deductible after considering the excess business loss rules?

Accepted Answer

A)  $270,000. 
B)  $250,000. 
C)  $20,000. 
D)  $0. 
E)  None of the choices are correct. 
A)  $270,000. 
B)  $250,000. 
C)  $20,000. 
D)  $0. 
E)  None of the choices are correct.

Question 15

This year Norma, a single taxpayer, paid $11,200 of real estate taxes on her personal residence and 9,500 of state income taxes. Which of the following is a True?

Accepted Answer

A)  Norma can deduct $11,200 of real estate taxes as an itemized deduction. 
B)  Norma can deduct $9,500 of state income taxes as a for AGI deduction. 
C)  Norma can deduct $10,000 of taxes as an itemized deduction. 
D)  Even if Norma has no other itemized deductions, she should claim the standard deduction. 
E)  None of the choices are correct. 
A)  Norma can deduct $11,200 of real estate taxes as an itemized deduction. 
B)  Norma can deduct $9,500 of state income taxes as a for AGI deduction. 
C)  Norma can deduct $10,000 of taxes as an itemized deduction. 
D)  Even if Norma has no other itemized deductions, she should claim the standard deduction. 
E)  None of the choices are correct.

Question 16

Deductible medical expenses include payments to medical care providers such as doctors, dentists, and nurses and medical care facilities such as hospitals.

Accepted Answer

A) True 
 B)False

Question 17

Scott is a self-employed plumber and his wife, Emily, is a full-time employee for the University. Emily has health insurance from a qualified plan provided by the University, but Scott has chosen to purchase his own health insurance rather than participate in Emily's plan. Besides paying $5,400 for his health insurance premiums, Scott also pays the following expenses associated with his plumbing business:
   
What is the amount of deductions for AGI that Scott can claim this year (2018)?

Accepted Answer

$15,500
$15,500 = $1,300 + $6,

Question 18

Han is a self-employed carpenter and his wife, Christine, works full-time as a grade school teacher. Han paid $525 for carpentry tools and supplies, and Christine paid $3,600 as her share of health insurance premiums (not with pre-tax dollars) for Han and herself in a qualified plan provided by the school district (not through an exchange). Which of the following is a True statement?

Accepted Answer

A)  The tools and supplies are deductible for AGI while the health insurance is an itemized deduction. 
B)  Both expenditures are deductible for AGI. 
C)  The tools and supplies are an itemized deduction but the health insurance is deductible for AGI. 
D)  Both expenditures are itemized deductions. 
E)  Neither of the expenditures is deductible. 
A)  The tools and supplies are deductible for AGI while the health insurance is an itemized deduction. 
B)  Both expenditures are deductible for AGI. 
C)  The tools and supplies are an itemized deduction but the health insurance is deductible for AGI. 
D)  Both expenditures are itemized deductions. 
E)  Neither of the expenditures is deductible.

Question 19

Cesare is 16 years old and works throughout the year at a local coffee shop. This year, he made $9,200 at the coffee shop and earned $2,000 in interest income from his savings account. Assume that Cesare is claimed as a dependent on his parent's tax return. What is Cesare's standard deduction for the year?

Accepted Answer

$9,550.
 Since Cesare is claim

Question 20

Jenna (age 50) files single and reports AGI of $40,000. This year she has incurred the following medical expenses:
   
Calculate the amount of medical expenses that will be included with Jenna's other itemized deductions.

Accepted Answer

$2,910
All expenses are qualified medica

The medical expense deduction is designed to provide relief for doctors and medical practitioners.

An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit (CD) is allowed to net the penalty against the interest income from the CD.

When taxpayers donate cash and capital gain property to a public charity, the AGI percentage limitation is applied in the following order:

Which of the following is a deductible miscellaneous itemized deduction?

Rental or royalty expenses are deductible "for" AGI.

Which of the following is a True statement?

Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence for acquisition debt incurred after December 15, 2017.

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

The profit motive distinguishes "business" activities from "personal" activities.

Qualified education expenses for purposes of the deduction of interest on educational loans are expenses paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent to attend a post-secondary institution of higher education.

Generally, service businesses are considered qualified trade or businesses for purposes of the deduction for qualified business income.

Bunching itemized deductions is one form of tax evasion.

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship. How much of this loss is not deductible after considering the excess business loss rules?

This year Norma, a single taxpayer, paid $11,200 of real estate taxes on her personal residence and 9,500 of state income taxes. Which of the following is a True?

Deductible medical expenses include payments to medical care providers such as doctors, dentists, and nurses and medical care facilities such as hospitals.

Jenna (age 50) files single and reports AGI of $40,000. This year she has incurred the following medical expenses: Calculate the amount of medical expenses that will be included with Jenna's other itemized deductions.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters

Exam 6: Individual Deductions

The medical expense deduction is designed to provide relief for doctors and medical practitioners.

An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit (CD) is allowed to net the penalty against the interest income from the CD.

When taxpayers donate cash and capital gain property to a public charity, the AGI percentage limitation is applied in the following order:

Which of the following is a deductible miscellaneous itemized deduction?

Rental or royalty expenses are deductible "for" AGI.

Which of the following is a True statement?

Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence for acquisition debt incurred after December 15, 2017.

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

The profit motive distinguishes "business" activities from "personal" activities.

Qualified education expenses for purposes of the deduction of interest on educational loans are expenses paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent to attend a post-secondary institution of higher education.

Generally, service businesses are considered qualified trade or businesses for purposes of the deduction for qualified business income.

Bunching itemized deductions is one form of tax evasion.

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship. How much of this loss is not deductible after considering the excess business loss rules?

This year Norma, a single taxpayer, paid $11,200 of real estate taxes on her personal residence and 9,500 of state income taxes. Which of the following is a True?

Deductible medical expenses include payments to medical care providers such as doctors, dentists, and nurses and medical care facilities such as hospitals.

Jenna (age 50) files single and reports AGI of $40,000. This year she has incurred the following medical expenses: Calculate the amount of medical expenses that will be included with Jenna's other itemized deductions.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters